The ten most interesting game dev deals of 2008

After the fireworks of 2007, the past 12 months was a comedown for games industry deal watchers.

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There was nothing to rival Activision Blizzard – indeed, the biggest deals were those that failed to materialise, such as EA’s aborted tie-up with Take 2 and rumours surrounding Epic Games and a Google swoop for Valve. Still, there was plenty of VC activity and a smattering of other moves that gave clues to where the smart money thinks games going in 2009.

10. Swordfish Birmingham and Swordfish Manchester sold-offIn a year when many small studios closed, things could have been worse in the UK after Activision Blizzard deemed Swordfish surplus to requirements following the merger. Happily, Codemasters absorbed Swordfish Birmingham and Swordfish Manchester was acquired by Monumental. Activision Blizzard did buy British when it acquired Freestyle Games in September, while Ubisoft picked up the publisher’s unwanted Swedish developer, Massive. Other notable studio takeovers this year included Take 2’s acquisition of Illusion Softworks, Atari buying MMO maker Cryptic Studios, 1Cs gobbling up of regional peers BUKA and Avalon Style Entertainment, and Razorworks being subsumed by British veteran Rebellion.

9. Babel acquired, middleware consolidatesOutsourcing pioneer Babel has been one of the most interesting British games services companies for years, and being acquired by India’s Quatrro in July provided a fitting final twist to its start-up-to-sector-dominance story. Consolidation continued on the middleware side, too, with Autodesk swooping for French AI specialist Kynogon in February and flashing its cash again in October to buy 3D animation rival Softimage, and Intel buying up the competition in acquiring fab-less physics chipmaker Ageia in February.

8. VCs back online game venturesIf there’s one thing venture capitalists like (apart from Californian sunshine) it’s scale. That’s one reason why they run screaming from conventional games but will pour millions into online – most MMOs strike out, but they might just fund the next World of Warcraft. Trion secured $70 million in a Series C funding round for its innovative online game projects; it’s now received $100 million since 2006 though it’s yet to release a product. Turbine at least had the courtesy to finish Asheron’s Call, Lord of the Rings Online and Dungeons and Dragons Online before returning to the VCs to for another $40 million.

7. $83 million makes Big Fish even biggerCredit crunch, what credit crunch? Seattle’s Big Fish swallowed up $83 million in financing from venture capitalists in September – just the biggest of dozens of similar cash injections fuelling a global race to be the biggest casual games publisher and distributor in the pond. At the other end of the scale, start-up portal Kongregate secured a useful $3 million in May for its user-generated and ranked Flash games site. The man buying into the plan was Amazon founder Jeff Bezos.

6. EA’s Korean adventuresEA is up to something in Korea. Earlier this month it acquired the Korean online games developer J2M, while back in May it grabbed the assets of mobile game developer and publisher Hands On Mobile Korea. Obviously EA wants to continue to push into the vast South East Asian market, where the monetization of games tends to be very different to the boxed product model still prevalent in the US and Europe. But it’s very likely we’ll also see EA’s Korean learnings and technology brought home in the form of better micropayment and subscription services in the West, too.5. Playfish nets $17 millionFounded in 2007 in London, Playfish is the most exciting British game developer you’ve probably never heard of. The company, which raised another $17 million from venture capitalists in October, specialises in making games for social networks. It’s already been hugely successful on Facebook, where it reckons its games command a double-digit percentage share of ALL time spend on the service worldwide. And you wondered why your Facebook friends don’t poke you any more…

4. Realtime Worlds’ $50 million funding boostWhen he’s not reinventing genres, Realtime Worlds’ Dave Jones likes to kick back and pull off a startling business coup. April’s $50 million Series B financing adds to the $31 million Realtime World’s raised back in 2006, and provides Jones and co with quite a warchest to fund the development of APB. It’s the online game development activities of Realtime Worlds that will be piquing the VCs interest, and the studio certainly shares their confidence – one of the first things it did with the money was buy back the distribution rights to APB from Korean publisher Webzen.

3. Amazon’s acquisition of ReflexiveReflexive Entertainment’s Big Kahuna Reef might have one of the coolest names in casual gaming, but somehow we doubt that’s why Amazon swooped for this casual game developer. Rather, it’s surely Reflexive’s digital distribution activities that caught the Amazon execs’ eyes. We expect Amazon to be ramping up a games-on-demand solution to rival the likes of GameTap and Steam – in just 12 months its digital music store has become second only to Apple’s.

2. MTV and Harmonix – the deal that keeps on givingWhen MTV Networks acquired Guitar Hero developer Harmonix back in 2006 for $175 million, the games industry gasped – not just at the rock-and-roll pricetag, but because Harmonix didn’t even come with the Guitar Hero intellectual property. Here was a deal championing talent over back catalogue, characterised as a dumb deal made by outsiders that actually produced another chart-topping bestseller barely a year later in Rock Band. That deal sneaks back into our 2008 roundup thanks to reports Harmonix’ founders received a staggering $300 million in bonuses this year. A one-off or the start of a new deal for development talent? It’s a bargain developers will still be discussing in 2009.

1. Sega and Apple – Monkey Ball for iPhoneOkay, we’re being cheeky. As far as we’re aware, Sega’s agreement in releasing Sega Monkey ball for the iPhone was the same as any other developers: the standard 70/30 split in revenues favouring the content creator over Apple. But by re-kindling the dream of self-publishing in game developers’ hearts – and also drawing hundreds of new outfits to mobile game development – Apple’s iPhone App Store produced the most exciting deal of 2008 by doing away with deals altogether. Whether Monkey Ball’s 300,000 sales at $10 in just 20 days fuelled unrealistic hopes for iPhone remains to be seen, however.

2008 has been a testing year for the development industry, with plenty of challenges to overcome before the economic downturn set in properly and sent shock waves of uncertainty through numerous studios. There were positives too, and a new hope in the form of the iPhone and iPod Touch.